j2 Reports Q1 2014 Results

LOS ANGELES--(BUSINESS WIRE)--
j2 Global, Inc. (NASDAQGS: JCOM) today reported financial results for
the first quarter ended March 31, 2014 and announced that its Board of
Directors has declared an increased quarterly cash dividend of $0.27 per
share.

FIRST QUARTER 2014 RESULTS

Quarterly revenues increased 18.0% to a record $134.1 million compared
to $113.6 million for Q1 2013.

Earnings per diluted share(1) for the quarter increased 22.4%
to $0.60 compared to $0.49 for Q1 2013. Adjusted Non-GAAP earnings per
diluted share(1)(2) for the quarter increased 13.4% to $0.76
compared to $0.67 for Q1 2013.

Quarterly EBITDA(3) increased 18.9% to a Q1 record $57.3
million compared to $48.2 million for Q1 2013.

Q1 2014 free cash flow(4) was $38.4 million, the same as for
Q1 2013, and reflects a $7.3 million payment during Q1 2014 for an
accrued Q1 2013 acquisition-related Digital Media obligation.

j2 ended the quarter with approximately $315 million in cash and
investments after deploying $52.4 million for acquisitions during the
quarter and j2's regular quarterly dividend.

Key financial results for Q1 2014 versus Q1 2013 are set forth in the
following table (in millions, except per share). Reconciliations of
earnings per diluted share, EBITDA and free cash flow to their nearest
comparable GAAP financial measures are attached to this Press Release.

Q1 2014

Q1 2013

% Change

Revenues

$134.1 million

$113.6 million

18.0

%

Earnings per Diluted Share (1)

$0.60

$0.49

22.4

%

Adjusted Non-GAAP Earnings per Diluted Share (1) (2)

$0.76

$0.67

13.4

%

EBITDA (3)

$57.3 million

$48.2 million

18.9

%

Free Cash Flow (4)

$38.4 million

$38.4 million

-

%

"The first quarter was very strong for j2, with Business Cloud Services
revenues growing by 11.1% and Digital Media revenues growing by 45.7%,
each versus Q1 2013," said Hemi Zucker, CEO of j2 Global. "In addition,
our Cloud Backup business has surpassed the $50 million annual revenue
run-rate milestone faster than anticipated while making a significantly
larger contribution to our EBITDA margins than anticipated."

BUSINESS OUTLOOK

j2 is reaffirming the following previously announced fiscal 2014
financial estimates: Revenues of between $580 and $600 million and
Adjusted Non-GAAP earnings per diluted share of between $3.23 and $3.47.

Adjusted Non-GAAP earnings per diluted share for 2014 excludes
share-based compensation of between $10 and $12 million, amortization of
acquired intangibles and the impact of any currently unanticipated
items, and adds back $1.5 million to reflect the impact of the fair
value adjustment to deferred revenues purchased in the Livedrive
acquisition, in each case net of tax.

It is anticipated that the normalized tax rate for 2014 (exclusive of
the release of reserves for uncertain tax positions) will be between 27%
and 29%.

DIVIDEND

j2's Board of Directors has approved a second quarter cash dividend of
$0.27 per common share, a 12.5% increase versus the dividend paid in Q2
2013. This is j2's eleventh consecutive quarterly dividend increase
since its first quarterly dividend in September 2011. The dividend will
be paid on June 3, 2014 to all shareholders of record as of the close of
business on May 19, 2014. Future dividends will be subject to Board
approval.

Notes:

(1)

The estimated GAAP effective tax rates were approximately 22.2% for
Q1 2014 and 19.5% for Q1 2013. The estimated Adjusted Non-GAAP
effective tax rates were approximately 27.1% for Q1 2014 and 25.0%
for Q1 2013.

(2)

For Q1 2014, Adjusted Non-GAAP earnings per diluted share excludes
share-based compensation, certain acquisition-related integration
costs, amortization of acquired intangibles and additional tax
expense (benefit) from prior years, and adds back the impact of the
fair value adjustment to deferred revenues purchased in the
Livedrive acquisition, in each case net of tax, totaling $0.16. For
Q1 2013, Adjusted Non-GAAP earnings per diluted share excludes
share-based compensation, certain acquisition-related integration
costs and amortization of acquired intangibles, in each case net of
tax, totaling $0.18. Adjusted Non-GAAP earnings per diluted share
amounts are not meant as a substitute for GAAP, but are solely for
informational purposes.

(3)

EBITDA is defined as earnings before interest and other expense,
net; income tax expense; depreciation and amortization; and the
items used to reconcile EPS to Adjusted Non-GAAP EPS referred to in
Note (2) above. EBITDA amounts are not meant as a substitute for
GAAP, but are solely for informational purposes.

(4)

Free cash flow is defined as net cash provided by operating
activities, less purchases of property, plant and equipment, plus
excess tax benefit from share-based compensation. Free cash flow
amounts are not meant as a substitute for GAAP, but are solely for
informational purposes.

About j2 Global

j2 Global, Inc. (NASDAQ: JCOM) provides Internet services through two
divisions: Business Cloud Services and Digital Media. The Business Cloud
Services Division offers Internet fax, virtual phone, hosted email,
email marketing, online backup, unified communications and CRM
solutions. It markets its services principally under the brand names eFax®,
eVoice®, FuseMail®, Campaigner®,
KeepItSafe®, Livedrive® and Onebox®,
and operates a messaging network spanning 49 countries on six
continents. The Digital Media Division offers technology, gaming and
lifestyle content through its digital properties, which include
PCMag.com, IGN.com, AskMen.com, Toolbox.com and others. The Digital
Media Division also operates NetShelter® Powered by BuyerBase®,
an advanced digital ad targeting platform, and Ziff Davis B2B, a leading
provider of research to enterprise buyers and leads to IT vendors. As of
December 31, 2013, j2 had achieved 18 consecutive fiscal years of
revenue growth. For more information about j2, please visit www.j2global.com.

"Safe Harbor" Statement Under the Private Securities Litigation
Reform Act of 1995: Certain statements in this Press Release are
"forward-looking statements" within the meaning of The Private
Securities Litigation Reform Act of 1995, particularly those contained
in Hemi Zucker's quote and the "Business Outlook" portion regarding the
Company's expected fiscal 2014 financial performance. These
forward-looking statements are based on management's current
expectations or beliefs and are subject to numerous assumptions, risks
and uncertainties that could cause actual results to differ materially
from those described in the forward-looking statements. These factors
and uncertainties include, among other items: ability to grow non-fax
revenues, profitability and cash flows; ability to identify, close and
successfully transition acquisitions; subscriber growth and retention;
variability of revenue based on changing conditions in particular
industries and the economy generally; protection of the Company's
proprietary technology or infringement by the Company of intellectual
property of others; the risk of adverse changes in the U.S. or
international regulatory environments, including but not limited to the
imposition or increase of taxes or regulatory-related fees; and the
numerous other factors set forth in j2 Global's filings with the
Securities and Exchange Commission ("SEC"). For a more detailed
description of the risk factors and uncertainties affecting j2 Global,
refer to the 2013 Annual Report on Form 10-K filed by j2 Global on March
3, 2014, and the other reports filed by j2 Global from time-to-time with
the SEC, each of which is available at www.sec.gov.
The forward-looking statements provided in this press release and
particularly those contained in Hemi Zucker's quote and the "Business
Outlook" portion regarding the Company's expected fiscal 2014 financial
performance are based on limited information available to the Company at
this time, which is subject to change. Although management's
expectations may change after the date of this press release, the
Company undertakes no obligation to revise or update these statements.

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED, IN THOUSANDS)

MARCH 31,

DECEMBER 31,

2014

2013

ASSETS

Cash and cash equivalents

$

208,068

$

207,801

Short-term investments

71,300

90,789

Accounts receivable,

net of allowances of $3,714 and $4,105, respectively

63,666

67,245

Prepaid expenses and other current assets

24,343

20,064

Deferred income taxes

2,110

3,126

Total current assets

369,487

389,025

Long-term investments

35,698

47,351

Property and equipment, net

38,829

31,200

Goodwill

483,255

457,422

Other purchased intangibles, net

246,263

223,533

Deferred income taxes

1,369

1,845

Other assets

3,383

3,413

TOTAL ASSETS

$

1,178,284

$

1,153,789

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued expenses

$

54,084

$

69,570

Income taxes payable

4,837

1,569

Deferred revenue

49,606

36,326

Liability for uncertain tax positions

5,711

5,535

Deferred income taxes

344

1,892

Total current liabilities

114,582

114,892

Long-term debt

245,796

245,670

Liability for uncertain tax positions

38,504

38,329

Deferred income taxes

34,703

35,833

Deferred revenue

12,460

11,189

Other long-term liabilities

3,873

1,458

Total liabilities

449,918

447,371

Commitments and contingencies

—

—

Stockholders' Equity:

Preferred stock

—

—

Common stock

467

461

Additional paid-in capital

227,149

216,872

Retained earnings

498,318

484,850

Accumulated other comprehensive income (loss)

2,432

4,235

Total stockholders' equity

728,366

706,418

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

1,178,284

$

1,153,789

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

THREE MONTHS ENDED MARCH 31,

2014

2013

Revenues

$

134,124

$

113,617

Cost of revenues (including share-based compensation of $154 for the
three months of 2014 and $214 for the three months of 2013)

23,388

20,235

Gross profit

110,736

93,382

Operating expenses:

Sales and marketing (including share-based compensation of $491 for
the three months of 2014 and $418 for the three months of 2013)

32,959

29,638

Research, development and engineering (including share-based
compensation of $140 for the three months of 2014 and $106 for the
three months of 2013)

7,213

6,746

General and administrative (including share-based compensation of
$1,599 for the three months of 2014 and $1,610 for the three months
of 2013)

28,979

24,011

Total operating expenses

69,151

60,395

Income from operations

41,585

32,987

Interest expense (income), net

4,948

4,877

Other expense (income), net

(319

)

(161

)

Income before income taxes

36,956

28,271

Income tax expense

8,191

5,500

Net income

28,765

22,771

Less net loss attributable to noncontrolling interest

—

(151

)

Net income attributable to j2 Global, Inc. common shareholders

$

28,765

$

22,922

Basic net income per common share:

Net income attributable to j2 Global, Inc. common shareholders

$

0.61

$

0.50

Diluted net income per common share:

Net income attributable to j2 Global, Inc. common shareholders

$

0.60

$

0.49

Basic weighted average shares outstanding

46,365,158

45,160,140

Diluted weighted average shares outstanding

46,765,732

45,668,167

j2 GLOBAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED, IN THOUSANDS)

THREE MONTHS ENDED MARCH 31,

2014

2013

Cash flows from operating activities:

Net income

$

28,765

$

22,771

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization

13,137

8,762

Accretion and amortization of discount and premium of investments

352

453

Amortization of financing costs and discounts

162

150

Share-based compensation

2,384

2,348

Excess tax benefit from share-based compensation

(4,082

)

(280

)

Provision for doubtful accounts

732

833

Deferred income taxes

(211

)

(1,446

)

Decrease (increase) in:

Accounts receivable

8,452

2,495

Prepaid expenses and other current assets

(1,657

)

(139

)

Other assets

107

357

(Decrease) increase in:

Accounts payable and accrued expenses

(16,228

)

160

Income taxes payable

4,723

2,138

Deferred revenue

205

92

Liability for uncertain tax positions

351

1,294

Other liabilities

102

60

Net cash provided by operating activities

37,294

40,048

Cash flows from investing activities:

Maturity of certificate of deposit

8,210

22,106

Purchase of certificates of deposit

—

(8,165

)

Sales of available-for-sale investments

29,705

31,932

Purchases of available-for-sale investments

(11,213

)

(35,244

)

Purchases of property and equipment

(2,936

)

(1,933

)

Purchases of intangible assets

(915

)

(333

)

Acquisition of business

(49,068

)

(62,771

)

Net cash used in investing activities

(26,217

)

(54,408

)

Cash flows from financing activities:

Debt issuance costs

—

(47

)

Repurchases of stock

(4,042

)

(2,069

)

Issuance of stock, net of costs

4,981

2,081

Excess tax benefit from share-based compensation

4,082

280

Dividends paid

(12,418

)

(10,684

)

Acquisition of business

(3,314

)

—

Net cash used in financing activities

(10,711

)

(10,439

)

Effect of exchange rate changes on cash and cash equivalents

(99

)

(755

)

Net increase (decrease) in cash and cash equivalents

267

(25,554

)

Cash and cash equivalents at beginning of period

207,801

218,680

Cash and cash equivalents at end of period

$

208,068

$

193,126

j2 GLOBAL, INC.

RECONCILIATION OF GAAP TO ADJUSTED NON-GAAP FINANCIAL MEASURES

THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(UNAUDITED, IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

Adjusted non-GAAP net income is GAAP net income with the following
modifications: (1) elimination of share-based compensation and the
associated payroll tax expense; (2) elimination of certain
acquisition-related integration costs; (3) elimination of
amortization of patents and intangible assets that we acquired;
(4) elimination of additional income tax and indirect tax expense
and benefit from prior years and (5) elimination of income tax
provision associated with share-based compensation and the
associated payroll tax expense, certain acquisition-related
integration costs, amortization of patents and intangible assets
that we acquired and additional indirect tax expense and benefit
from prior years.

THREE MONTHS ENDED MARCH 31, 2014

THREE MONTHS ENDED MARCH 31, 2013

(2)

(4)

(2)

Acquisition-

Additional

Acquisition-

(1)

related

Tax Expense

(1)

related

Share-based

Integration

(3)

(Benefit) from

Adjusted

Share-based

Integration

(3)

Adjusted

GAAP

Compensation

Costs

Amortization

Prior Years

Non-GAAP

GAAP

Compensation

Costs

Amortization

Non-GAAP

Revenues

$

134,124

—

541

—

—

$

134,665

$

113,617

—

(44

)

—

$

113,573

Cost of revenues

23,388

(154

)

—

(424

)

—

22,810

20,235

(214

)

(88

)

—

19,933

Operating expenses:

Sales and marketing

32,959

(491

)

(19

)

—

—

32,449

29,638

(418

)

(992

)

—

28,228

Research, development and engineering

7,213

(140

)

—

—

—

7,073

6,746

(106

)

(579

)

—

6,061

General and administrative

28,979

(1,599

)

1,061

(9,960

)

(713

)

17,768

24,011

(1,610

)

(2,479

)

(6,722

)

13,200

Interest expense (income), net

4,948

—

—

—

—

4,948

4,877

—

—

—

4,877

Other expense (income), net

(319

)

—

—

—

—

(319

)

(161

)

—

—

—

(161

)

Income tax provision (5)

8,191

824

(284

)

3,431

1,362

13,524

5,500

774

1,763

2,311

10,348

Net income attributable to j2 Global, Inc. common stockholders

$

28,765

1,560

(217

)

6,953

(649

)

$

36,412

$

22,922

1,574

2,331

4,411

$

31,238

Net income per share attributable to j2 Global, Inc. common
stockholders*:

Basic

$

0.61

0.03

(0.01

)

0.15

(0.01

)

$

0.77

$

0.50

0.03

0.05

0.10

$

0.68

Diluted

$

0.60

0.03

(0.01

)

0.15

(0.01

)

$

0.76

$

0.49

0.03

0.05

0.10

$

0.67

* The reconciliation of net income per share from GAAP to adjusted
non-GAAP may not foot since each is calculated independently.

The Company discloses adjusted non-GAAP Earnings Per Share ("EPS")
as supplemental non-GAAP financial performance measure, as it
believes it is a useful metric by which to compare the performance
of its business from period to period. The Company also
understands that this adjusted non-GAAP measure is broadly used by
analysts, rating agencies and investors in assessing the Company's
performance. Accordingly, the Company believes that the
presentation of this adjusted non-GAAP financial measure provides
useful information to investors.

Adjusted non-GAAP EPS is not in accordance with, or an alternative
to, net income per share and may be different from non-GAAP measures
with similar or even identical names used by other companies. In
addition, this adjusted non-GAAP measure is not based on any
comprehensive set of accounting rules or principles. This adjusted
non-GAAP measure has limitations in that it does not reflect all of
the amounts associated with the Company's results of operations
determined in accordance with GAAP.

j2 GLOBAL, INC.

NET INCOME TO EBITDA RECONCILIATION

THREE MONTHS ENDED MARCH 31, 2014 AND 2013

(UNAUDITED, IN THOUSANDS)

The following table sets forth a reconciliation of EBITDA to net
income, the most directly comparable GAAP financial measure.

THREE MONTHS ENDED MARCH 31,

2014

2013

Net income

$

28,765

$

22,771

Plus:

Other expense (income), net

(319

)

(161

)

Interest expense (income), net

4,948

4,877

Income tax expense

8,191

5,500

Depreciation and amortization

13,139

8,794

Reconciliation of GAAP to adjusted non-GAAP financial measures:

Share-based compensation and the associated payroll tax expense

2,384

2,348

Acquisition-related integration costs

(501

)

4,094

Additional indirect tax expense from prior years

713

—

EBITDA

$

57,320

$

48,223

EBITDA as calculated above represents earnings before interest and
other expense, net, income tax expense, depreciation and
amortization and the items used to reconcile GAAP to adjusted
non-GAAP financial measures, including (1) share-based compensation,
(2) certain acquisition-related integration costs and (3) additional
indirect tax expense from prior years. We disclose EBITDA as a
supplemental non-GAAP financial performance measure as we believe it
is a useful metric by which to compare the performance of our
business from period to period. We understand that measures similar
to EBITDA are broadly used by analysts, rating agencies and
investors in assessing our performance. Accordingly, we believe that
the presentation of EBITDA provides useful information to investors.

EBITDA is not in accordance with, or an alternative to, net income,
and may be different from non-GAAP measures used by other companies.
In addition, EBITDA is not based on any comprehensive set of
accounting rules or principles. This adjusted non-GAAP measure has
limitations in that it does not reflect all of the amounts
associated with the Company's results of operations determined in
accordance with GAAP.

j2 GLOBAL, INC.

NON-GAAP FINANCIAL MEASURES

(UNAUDITED, IN THOUSANDS)

Q1

Q2

Q3

Q4

YTD

2014

Net cash provided by operating activities

$

37,294

$

37,294

Less: Purchases of property and equipment

(2,936

)

(2,936

)

Add: Excess tax benefit from share-based compensation

4,082

4,082

Free cash flows

$

38,440

$

-

$

-

$

-

$

38,440

2013

Net cash provided by operating activities

$

40,048

$

68,973

$

25,859

$

58,444

$

193,324

Less: Purchases of property and equipment

(1,933

)

(4,056

)

(5,126

)

(7,511

)

(18,626

)

Add: Excess tax benefit (deficit) from share-based compensation

280

1,301

1,590

(476

)

2,695

Free cash flows

$

38,395

$

66,218

$

22,323

$

50,457

$

177,393

The Company discloses Free Cash Flows as supplemental non-GAAP
financial performance measure, as it believes it is a useful
metrics by which to compare the performance of its business from
period to period. The Company also understands that this non-GAAP
measure is broadly used by analysts, rating agencies and investors
in assessing the Company's performance. Accordingly, the Company
believes that the presentation of this non-GAAP financial measure
provides useful information to investors.

Free Cash Flows is not in accordance with, or an alternative to,
Cash Flows from Operating Activities, and may be different from
non-GAAP measures with similar or even identical names used by other
companies. In addition, the non-GAAP measure is not based on any
comprehensive set of accounting rules or principles. This non-GAAP
measure has limitations in that it does not reflect all of the
amounts associated with the Company's results of operations
determined in accordance with GAAP.